Ramblings and doodlings of an unsettled mind!

What seems to be the late delivery and operational KLIA2 is a topic which many thought they have a strong opinion to make or speculate. Often, they are without having proper facts and basis. KLIA2 is the world’s first modern Low Cost Carrier Terminal designed to cater for huge passenger growth and demands.

As such, KLIA2 almost became an organic facility to meet the demands and needs for all various stakeholders catering for the projected 45 million passengers per annum (MPPA), expected by 2020.

Transport Minister Hishamuddin Hussein in his recent site visit at KLIA2 project

Transport Minister Dato’ Seri Hishamuddin Hussein is confident that issues on KLIA2 would be resolved after his site visit last Friday. A special committee chaired by Deputy Transport Minister Dato’ Aziz Kaprawi will meet weekly to monitor the progress.

The Transport Ministry has set up a committee to ensure that the long-delayed Kuala Lumpur International Airport 2 (KLIA2) project will be operational by March next year, Acting Transport Minister Datuk Seri Hishamuddin Hussein said.

Hishamuddin said the special committee led by deputy minister Datuk Abdul Aziz Kaprawi will make sure the new deadline for operations of the low-cost carrier terminal will be met.

“Further delays are unacceptable. Under my watch, we will make sure that the new deadline will be met. To ensure this, I have decided to form a special taskforce to monitor the project,” he said when visiting the project site last Friday.

Hishamuddin also said the committee will explain to the public why the RM4 billion terminal is delayed and keep a close watch on the 43 contractors involved in the project.

The committee will also investigate the increased job specifications that has been blamed for the cost overruns for the project.

“From today onwards the reason for the delays will be communicated better as the public has the right to know,” he said.

The KLIA2 project has been delayed for five times from September 2011, the initial opening date.

Hishamuddin said it would be unfair to blame on all 43 contractors of the project for the cost overrun and delays but added that it may not be necessary to form an audit committee to investigate.

“I don’t think right now there is a need for an audit yet, just that the delays and so on were not communicated well to the public.

“If the special committee did not meet its target, there might be a need for an audit committee,” he said.

Last Wednesday, the ministry told the Dewan Rakyat that the KLIA2 delay did not leave any financial impact on Malaysia Airports Holdings Bhd (MAHB).

In early June, MAHB announced that it will bill the main contractors UEMCBinapur i JV just under RM200,000 per day for each day that the terminal building does not meet the deadline.

MAHB has issued the certificate of non-completion pertaining to the matter given that the contractors failed to complete their work by the approved deadline which is June 15.

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It has been agreed that the constractors UEM-Bina Puri which is developing the KLIA2 project as a turn key would set their own delivery date and MAHB Project Management Team will act as a project manager for the owners MAHB. It has been made to understand that the contractors is giving 30 April 2014 as the delivery date and Malaysia Airports ready to execute the ORAT.

It is expected low class operator Tony Fernandes to be his usual self and taking cheap and distorted potshots against MAHB. The Sun has this story on what is AXN newest reality show star’s opinion

Time is running out, Tony Fernandes tells MAHB

4 July 2012

AirAsia Chief Executive Officer Tan Sri Tony Fernandes has urged Malaysia Airports Holdings Bhd (MAHB) to beef up its readiness to face the competition, saying most Asean countries are competing against each other to persuade greater involvement of low-cost carriers.

The aviation supremo said MAHB must act fast to complete the new low-cost carrier terminal, Kuala Lumpur International Airport (KLIA) 2.

Fernandes said Thailand has made Don Mueang the low-cost hub for Bangkok and the Philippines has designated Clark as the gateway for no-frills carriers, while Singapore is building a new budget terminal to more than double capacity to 16 million passengers a year from seven million.

“It’s clear the world won’t wait for MAHB to get its act together. Time is running out,” he said in his latest update in Tony Fernandes CEO Blog.

Fernandes said when KLIA2 was first proposed, MAHB said it would cost RM2 billion, a figure that was later revised to RM2.6 billion. Then came news that the terminal would cost RM4 billion, double the original estimate, and now there is talk that the bill could go as high as RM5 billion, he said.

“That makes no sense – the low-cost terminal will now cost much more than KLIA. Yes, I asked for a new terminal but one that has simple facilities.

“These overruns are matched by delays in the completion date from originally up and running by September 2011, to the first, and later, the second quarter of 2012.

“Well, here we are and construction is only half done. We have been told the terminal will only be operational by the first quarter of next year at the earliest or possibly early 2014, but I wouldn’t hold my breath,” Fernandes said in an article entitled “What’s with the new terminal?”

Fernandes also countered those who attack him for questioning MAHB, saying: “This is not the attitude, it’s about not settling for second place and challenging things that are not right.

“Corporate Malaysia has to tell our leaders what’s wrong, neither is this about government-linked companies versus private ones. It’s about being the best, period.”

It is neither necessary nor proper since there are qualified professionals to manage the progress and act as project managers for KLIA2, just like any other turnkey project all over the world.

The fact is that the two Tonys and Nurul (plus other critics if not liars when it comes to the facts about Malaysia Airport’s KLIA2) manipulate information without telling the whole truth and proper background to mitigate the development and progress of the project right up to current status. The salient points about the KLIA2 project were never included in any of their criticism, which should actually be regarded as an opportunity to demonise and cause distrust against a GLC and eventually the Federal Government.

This was thought to be the original proposal in early 2009 of the new LCCT to replace the current LCCT

The development of the KLIA2 project had risen in terms of size, facilities and the quality of the facilities provided, operational flow, design, ancillaries and peripherals from originally an LCCT to replace the one which was built as an adhoc facility at the Southeast of KLIA.

If Tony Fernandes is continuing to complain about the current LCCT and Tony Pua echoing that cry, then it is good that the proper background is provided. When AirAsia first instructed to move their operations from Subang to KLIA in 2002, they were totally against it. They blamed Malaysia Airports for not providing the type of facility that suit their low class operation, since KLIA Main Terminal Building was fully automated where as they wanted a manual system.

Later the project was shifted to the current site, to meet the future ORAT growth which include the construction of the current third runaway and eventually the fourth runaway

As such, then PM ‘Flip-Flop’ Abdullah Ahmad Badawi in 2005 instructed that a purpose built LCCT was constructed immediately. It was done in record time of nine months with minimal frills, to accommodate then Fernandes’s 4 MMPA operation. If up to him, he wanted a fully manual system and a terminal so bare that it is not even air-conditioned.

Malaysia Airports met half way, to accommodate for Air Asia’s business model and without denying comfort and most importantly safety of the passengers and air operations personnel. At the LCCT was designed for an operation to cater up to 10 MPPA, since Air Asia then was still unable to do a projection of their operations. That is a physical structure where Air Asia calls home, which actually enabled the company to have a meteoric growth and expand in the manner that it did.

Some time in 2009, Malaysia Airports developed a program to replace the current LCCT with a new and much better LCCT. This coincide the time where Fernandes’s atttempt to manipulate Sime Darby to build the Labu LCCT was shot down.

The increased in scope and facility requirements by different stakeholders of KLIA2

The original new LCCT (dubbed KLIA2) was developed by the consultants based on the design for 55 contact piers, to accommodate up to 45 MPPA for both international and domestic low cost carrier passengers. At that point in 2009, it was provisionally budgetted at a little over RM 2 billion. However, the various requirements and scope of facilities changed when all stake holders came back in stages with their own increased requirements to cater for the future growth.

MAHB accommodated most of these requests, because the primary objective is to provide a modern facility that would facilitate better and more comfort to air travelers.

The requirements for KLIA2

The increased in tarmac parking areas which include area of expansion (mostly to cater for AirAsia’s request) at the north west site of the KLIA complex and the incorporation of the the third runaway is the biggest contributor to the escalated new budget for KLIA2. Even the land area grew by 230%. The earthwork took the single biggest chunk of the revised budget since most of the developed area is marsh and swamp.

Next is the increased size in the terminal and another floor added, to provide for the authorities requirements to separate the operation and flow of the domestic and international arrivals and departures.

KLIA existing facility and operation

MAHB even accommodated the requirements of Air Asia as the expected biggest operator in the KLIA2 . They requested to incorporate Tune Hotel within the KLIA2 complex and Air Asia HQ with access to the airside apron and they are included in the revised development and construction, now ongoing. Originally when MAHB wanted to incorporate a third runaway in the project, Tony Fernandes was very and blunt to lambast the proposal.

Then Air Asia saw the opportunity for better operations and agreed but just wanted a 2.2 km runaway. Later, the representatives in Air Asia in the KLIA2 development team ‘Flip-Flopped’ further and their requirements were revised for a 4km runaway with a 2.5 km separation from the existing No.2 runaway.

The KLIA master plan, revised

One important point to note that Fernandes and Pua keep raising on MAHB’s decision not to go with the original proposal but shift the KLIA2 to the current site, which is west to the MTB. Had the original proposal be carried out, there would exist operational nightmare since to connect the new terminal to the existing runways, MAHB would need to build a very long viaduct and demolish existing structures and reconstruct them elsewhere.

That probably include the either the VIP terminal Bunga Raya Complex on the west of MTB or the Malaysia Airlines Flight Management Building and Malaysia Airports KLIA office on the east of KLIA. Not to mention the Concord Inn.

The adjusted facilities to meet increased requirements

The additional and improved facilities thus warrant the development cost of KLIA2 to be readjusted accordingly. The KLIA2 will include 68 contact piers with aerobridges and 8 remote stands, an integrated transportation hub, an annex shopping mall with the combined amount of 225 retail outlets, two hotels and an airside hotel and a second air control tower. The current cost of developing KLIA2 which is a full facility terminal equivalent to any terminal catering full service and premium airlines is now factored at slightly over RM 4 billion.

MAHB opted to go for fully automated check in and baggage handling system (BHS) in anticipation of the demands of 45 MPPA. A premium lounge is also incorporated, to cater for Air Asia’s requirements. What MAHB refused to have is to incorporate an area for Air Asia’s museum as part of Fernandes’s glorification attempt where he actually wanted to house the first Air Asia B737-200.

The cost comparison between major airport terminals around the world

The fact which Fernandes, Pua nor Nurul would never utter nor admit is that development cost of RM 4 billion for a 2.75 million sq. ft. full facility is very cost effective as compared to the other terminals all over the globe. So is the speed of the construction. Even if the revised delivery as per UEM-Bina Puri’s own deadline at 30 April 2014, the construction period is still less than four years.

The construction cost at RM 89 psf is very much lower than the global industry averages, by 1300%.

The factors that brought about the revised delivery deadline comes from the various stakeholders. This include law enforcement authorities which include the Immigration, Royal Customs and Police, to cater for their own expected increased operational issues and problems. For instance, Immigration Department requested that their counters be expanded by 60% to 80 numbers.

The original timeline of the KLIA2 delivery by UEM-Bina Puri

Air Asia itself is a problematic customer for MAHB. MAHB was professional enough to invite and consult Air Asia in the process of the selection for passenger and baggage check in and handling system (BHS). However, they were very slow in their internal process to select which of the available system suits their operations since they were not allowed to develop their own systems for obvious reason; they had no relevant experience to do an indigenous system.

Other issues include the construction which did not meet the consultants nor authorities set standards and specifications. The rectification naturally takes time and problems to rectify are usually doubled compared to starting afresh.

Site map of KLIA2

Those are some of the 106 variations that MAHB had to comply and accommodate which naturally added to the compounded problem of the KLIA2 delivery date for the contractors.

What Fernandes, Pua or Nurul also did not or will ever mention is that MAHB raised their own funds to pay for KLIA2 without being a financial burden to the Federal Government, since they are financial sound and the current and projected liquidity position is very solid. Even at present moment, MAHB still enjoy financial market rating of AAA.

What the trio and the likes of Malaysia Airports demonisers will also not say is that the airport operations in KLIA, LCCT, Penang, Kota Kinabalu and Kuching is cross subsidising 34 other airports in Malaysia, so that more Malaysians can travel in better shape, comfort and most of all, safety.

MAHB projected income

Handling 45 MPPA means at current rates, MAHB is expected to earn between RM 600-650 million in airport charges when it reaches its maximum capacity. Added with the rentals from the retail outlets, hotels, offices and other facilities, KLIA2 would definitely be a golden goose in MAHB’s farm.

That is without taking consideration of new regional and international low cost carriers’ operation into KLIA2.

Instead, they collaborate as the political soundbites to demonise MAHB especially the BOD and management, lead by a seasoned and career airlines and airports operation executive Tan Sri Bashir Ahmad Abdul Majid and his team of dedicated airport managers and operators.

It is without doubt that the KLIA2 is a project for the rakyat. Just like new airports like Bintulu, Sibu and soon, Lahad Datu.

Since as individuals marketing-manipulative entrepreneur Fernandes, party strategist Puaand political slut Nurul did not positively contribute of the delivery KLIA2 but as competent and incorrigible liars instead in tandem be prickly obstacles with their manipulation and lies, then they equivocaly should be regarded as Anti Rakyat.